The Morning Vibe

09/07/12 -- The electronic grains have started the week strongly, completely reversing Friday night's end of week losses in corn and soybeans, and partially so in the case of wheat.

It would seem then that there wasn't a lot of rainfall relief for the Midwest over the weekend.

A new breaking development is heavy flooding in the Krasnodar district of Russia, the death toll for which has risen to 150, with 12 killed in the Black Sea port of Novorossiysk.

I don't have any information yet on damage potential to standing crops in the region and/or damage/loss to grains in storage, but there will surely be some.

Corn is around 20-25 cents higher this morning, with beans adding a further 30-40 cents. Front month Jul 12 beans are currently 33 3/4 cents higher at USD16.53 1/2, within sight of the record all-time closing high of USD16.58 set in 2008.

Jul 12 corn currently stands 18 3/4 cents higher at USD7.62, Thursday night's close of USD7.68 was the highest levels for corn in more than a year. A more or less vertical ascent considering that corn was at its lowest levels in 17 months as recently as Jun 1st.

There's talk of the US ethanol mandate being reduced (ie lowering the mandatory amount of ethanol inclusion levels in gasoline sold at the pumps in the US), with crude oil levels hovering around USD85/barrel and corn closing in on USD8/bushel. That would be a real game-changer were it to happen, with 40% of the US crop destined for the ethanol sector.

In an election year I guess anything could happen, although it sounds more like a vote loser than a vote winner at the moment to me. That could change though. If it did the market would probably fall out of bed overnight in one fell swoop of a pen in Washington.